Unlocking Trade Potential: Ethiopia’s Strategic Engagement with BRICS+ Nations

Abstract The BRICS countries, renowned for their substantial contributions to global trade, have broadened their influence by welcoming new members, including Iran, Ethiopia, Egypt, and the UAE. This study aims to empirically analyze Ethiopia's trade in goods with both BRICS and the newly admitted members, now collectively referred to as BRICS+. The Trade Complementarity Index (TCI) is computed to assess Ethiopia's export and import complementarity with BRICS + countries during the period from 2018 to 2022. Furthermore, the study utilizes the augmented gravity model of trade to identify the factors driving trade flows between Ethiopia and BRICS+. The TCI findings indicate that Ethiopia's export complementarity with BRICS + remains below 13, while import complementarity consistently exceeds 40, suggesting limited export opportunities but significant import potential. Moreover, the augmented gravity model results for total trade, exports, and imports reveal that most variables exhibit the expected sign and are statistically significant. The findings suggest that, among other variables, the GDPs of trading countries and population size can explain total trade, exports, and imports. Additionally, factors such as distance and inflation rates play crucial roles. Identifying these trade determinants can assist Ethiopia in enhancing bilateral trade flows with BRICS + members.